Photo: Lara604 via flickr
The Consumer Financial Protection Bureau (CFPB) has added yet another to-do to its ever-expanding agenda: On Wednesday, CFPB director Richard Cordray vowed to go after big banks that engage in transaction ordering—that is, ordering transactions from biggest to smallest—to hit customers with hefty overdraft fees.
“With the fast-moving pace of our modern economy, consumers may engage in numerous transactions and pile up multiple overdraft charges before realising what has happened and how much damage has been done,” Cordray said in a roundtable discussion at Hunter College in New York.
“We are concerned that overdraft practices employed by some banks unnecessarily increase consumer costs by making it difficult to anticipate and avoid fees.”
The CFPB plans to parse through data provided by banks to investigate how consumers are affected by omitted or confusing information for overdraft procedures and misleading marketing materials.
The bureau will also look into how such practices disproportionately impact low-income and young consumers who are just beginning to manage their finances, and therefore more vulnerable to bank’s shady tactics.
Cordray noted that just under 10 per cent of checking account customers bear a hefty 84 per cent of all overdraft fees.
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